You must have heard as well as read how people are being affected by the current foreclosure predicament which has gripped the country. It is depressing to someone in the neighbor or someone in the family lose their home to foreclosure, and at a time like this it feels like its lucky it was not me.
There is no doubt that if you are a homeowner it affects you and even if you don’t own a property the foreclosure affects the society and the economy, and of which you are a part. When a foreclosed home is sold at a discount it affects the worth of all homes in the neighborhood.
The bank sells the home which is foreclosed at a discount. As banks do not deal with selling homes, they just lend you money to buy one. Banks that have Real Estate Owned account and cannot write loans on three times the value of the foreclosed home they have with them so they have to sell the home as quickly as possible, and this is the reason why you can get a bank foreclosed home at a deep discount.
There are some steps you can take if you are a home owner to avert foreclosure. You are given some time to clear your dues; you can pay the expenses of filing the foreclosure and end the foreclosure. This is known as reinstatement of the loan. In case you are not able to pay all the installments you have missed then you have some other options. Like…
It is a good idea to sell your home within the specified period. You can find a good real estate agent to get an idea of the real market value of your property to put it up for sale. Find the best possible deal and sign the contract.
In case your house is valued at an amount which is less than what you have to pay then a very good option for you is to go for a short sale. It is true that a short sale also affects credit rating but it is better than going for a foreclosure. You will need to discuss it with your lender to see if he is ready to cooperate with you on a short sale. In other words it is a pre-foreclosure redeemed.
You can also deed the home back to the lender. When the homeowner gives all the required documents to the lender he can forgive the mortgage, which will automatically cancel the impeding foreclosure. But mind you a deeds-in-lieu of foreclosure may have the same affect on your credit as a foreclosure.
Obviously the best option is to pay and reinstate the mortgage. But you will have to pay the required amount and an added sum for legal and any other charges which are required for reinstating the mortgage.
It is very important for anyone who is going for foreclosure to act now. Do not wait for anything as the situation may get worse for you.